April 29, 2003

Does Ownership Matter in Local Television News?

Which Ownership Produces the Best "Quality" News?

Which Ownership Produces the Best "Quality" News?


Ownership Size and Quality

What category of ownership best serves the public interest when it comes to news?

Our five-year data sample suggests that when it comes to overall quality, smaller is better.

Size of Corporate Owner and Quality Grade

A

12%
13%
19%
30%

B

31
32
35
35

C

34
30
24
18

D

18
15
16
13

F

5
10
6
4

Total

100%
100%
100%
100%

Stations owned by small companies, those with three stations or fewer, were more than twice as likely to receive "A" grades than stations owned by either the ten-largest station groups, or the next 15 largest.

In all, 30% of small-company stations earned "A's," compared with just 12% of the 10 largest and 13% of the next 15 largest station groups.1

O&O's versus Affiliates

One argument offered by proponents of bigness is that larger companies would have the resources to provide higher quality news to communities. This might be particularly true of so-called "O&O's," stations owned and operated by the big four networks, ABC, NBC, CBS and Fox, because of their financial resources and the companies operating their own network news divisions.

The data suggest the opposite is true. Network "affiliates," those stations not owned and operated by the networks, generally had higher quality scores than did O&O's.

Statistically, affiliates were 50% more likely to turn out "A" grade content than were O&O's. Or, put another way, 18% of affiliate stations earned "A's'" versus 12% of O&O's.

Local Ownership and Quality

On the other side, some critics of bigness have long argued that local ownership makes for better journalism, because of a greater psychological investment and involvement in the community. Interestingly, the data suggest something different.

Local ownership offered little protection against stations being very bad, and their stations were less likely to be very good.2

Local vs. Non-Local Ownership and Quality Grade
A
7%
21%
B
36
32
C
34
23
D
17
17
F
6
7
Total
100%
100%

In our five years of study, we had 53 stations broadcasting in the same market as the corporate headquarters, and 113 stations with out-of-town owners. Stations with local owners tended to be below average when it comes to overall quality. They were only a third as likely as stations without local owners to receive an "A" grade, and the locally-owned stations were more likely to receive a C.

Cross-Ownership and Quality

Another hypothesis offered by proponents of deregulation in recent years is that cross-ownership-owning both a television station and a newspaper in the same market-also might encourage quality. The newspaper in town usually is the news gathering organization with the greatest resources, the most reporters, the strongest expertise, the deepest beat system, and often the most active investigative teams. Putting these resources on the air, creating joint projects, and exploring the potential of convergence, the argument goes, can only make the television station better.

Here our universe of analysis was small, just six stations, but this represents nearly a quarter of the 26 cross-owned TV stations in the country. The data offer some evidence to support the argument favoring cross ownership. Stations with cross ownership were more than twice as likely as other stations overall to generate "A" quality newscasts.

Public versus Private Ownership and Quality

What about public ownership versus private? Another argument that has circulated over the years, and which may have gained some velocity recently, is that the short-term pressures and extraordinarily high profit expectations involved with publicly traded ownership of local television may discourage quality. Even executives at some publicly traded companies have wondered aloud in recent years whether it would be better to take their companies private. Moreover, several of the most admired news companies in the United States, such as the Washington Post Co., have two-tier stock structures that, in a public ownership posture, keep control largely in the hands of family members.

Our data suggest that the simple distinction of public versus private ownership did not, on its face, mean much in terms of the quality of the local news their stations produced.

Private companies slightly out performed public companies, primarily when it came to making their news more local. But these differences were not large enough to be significant.

Companies that have changed hands

We also looked at companies that had changed owners during the five years of our study. Here, we found no discernible differences between stations that had changed hands and those that had not. This may reflect the fact that some buyers improve stations while others weaken them. But it does suggest that changing hands is not on its face damaging or helpful. The fact that a station had changed hands did not mean its new owners generally felt compelled to cut costs and find efficiencies to justify or help finance their purchase.

A New Analysis

Some parties interested in the eventual FCC's rulings questioned whether it was fair for our February 17th report to include some stations more than once even if the timeslot studied was different. These critics, who were hired by networks advocating deregulation, found the distinction between 172 distinct newscasts and 154 stations confusing, even though this was done in the interest of fairness, so as to include more quality scores from stations if they were studied at different timeslots. To respond to this concern, we have reviewed the data to see if any of the findings about quality presented in the February 17th report were substantially changed if we included only the single most recent appearance of each station, regardless of timeslot or daypart. This more limited selection criteria resulted in a data base of 21,218 news stories broadcast on 154 distinct news programs/timeslots at 154 stations.

This new analysis reinforces the findings about ownership and quality. For instance, when it came to the biggest versus smallest company-owned stations, the quality gap actually widened slightly. In the new analysis, 33% of small company stations earned "A's" (up three percentage points) compared with still just 12% of big company stations (unchanged). None of the small company-owned stations, furthermore, earned "F's" in the new analysis, (compared with 4% in the broader analysis).

Quality Scores by Size of Ownership

All Stations for Only Single Most Recent Year
(1998-2002)
A
12%
14%
22%
33%
B
31
33
34
39
C
34
28
25
11
D
18
16
13
17
F
5
9
6
 
100%
100%
100%
100%

Similarly, the gap in quality shows a small increase when comparing O&O stations to Affiliates. Under the broader analysis, 18% of the Affiliates earned "A" grades, versus only 12% of their O&O counterparts. In limiting the analysis to include all stations for just one year each, Affiliates improved slightly, with 19% of those stations earning "A" grades. Meanwhile, the percentage of O&O stations earning "A's" declined slightly (to 10%).

Quality Grades for O&O's vs. Affiliates

All Stations for Only Single Most Recent Year
(1998-2002)
A
10%
19%
B
29
34
C
39
25
D
22
15
F
7
 
100%
100%

Is there an ideal ownership type?

One obvious question may be what would be an ideal owner from the standpoint of serving the public interest.

Research can never offer a definitive answer to a question like this but it can be suggestive.

On the surface, the data would offer this glib answer:

The ideal owner would be a small company, headquartered in another town, which owned a limited number of affiliated stations but also owned the local newspaper. It could be either public or private.

Of course this answer is probably an illusion. Most small companies are unlikely to own a newspaper in town as well as a TV station. They are also less likely to be out-of-town owners.

The realities of the marketplace tend to preclude utopian results. The perfect corporation is as unlikely as the perfect market.

But the findings do suggest different ownership structures have virtues as well as weaknesses. O&O's, for instance, excel at offering communities a variety of viewpoints in their newscasts but don't fare well for overall quality. Small companies score best for overall quality, but mid-sized companies surpass them when it comes to enterprise and localism.

Above all, ownership matters. The statistical margins here are too great to be dismissed as random. One would hope that federal regulators would include in their definition of public interest the question of the content and character of news. For the data show some ownership structures are more likely to produce it than others.

Most importantly, the data raise serious questions about regulatory changes that lead to the concentration of vast numbers of TV stations into the hands of a few very large corporations. The findings strongly suggest that this ownership structure, though it may prove the most profitable model, is likely to lead to further erosion in the content and public interest value of the local TV news Americans receive.

Looking closer at each ownership type offers further insights into their value.

1 The original report included the following: "Not only were smaller companies better, the biggest companies were more likely to stand out as notably bad. The largest owners were twice as likely as small companies to produce "F" grade newscasts." In the updated figures, the biggest and smallest companies were about equally as likely to produce "F" grade newscasts.

2 The original report read, "Local ownership offers some protection against stations being very bad, but it does nothing to encourage stations to be very good." The percentage of locally owned stations earning "A"'s was originally reported at 10%, compared to16% for non-locally owned. In the updated figures, the gap widens to 7% for locally owned and 21% for non-locally owned, strengthening the original findings.